Tuesday, October 21, 2008

How Much Is One Cougar Helicopter?

Malaysia's Ministry of Defence is embarking on the replacement plan of the existing Sikorsky S61-A4 Sea Kings helicopters, Nuri, with new helicopters.

Tenders came in from international bidders such as Sikorsky's S92, AgustaWestland’s Merlin, Eurocopter's Cougar and Kenlowna Flightcraft Ltd's MI-172.

It seems that Eurocopter [a subsidiary of European Aeronautic, Defence and Space (EADS)] has been preferred as the main supplier for the helicopters. The Ministry of Defence has mentioned that the due consideration has been made before deciding to select Eurocopter. The helicopter model that was proposed is the Eurocopter EC 725 Cougar.

Its usage can be used for tactical troop transport, special operations, search and rescue, combat search and rescue, maritime surveillance, humanitarian support logistic ground support, medical evacuation and shipborne operations. Its specifications could come with optional weaponary used in special operations or combat search and rescue (CSAR).

So far, only fourteen units are in operation in the French army units.

This EC 725 comes with side-firing armament such as two 7.62mm general purpose machine guns, radar and FLIR (forward-looking infrared) for day and night-time search and rescue capability.

There are issues which has implicated the current Deputy Prime Minister where it was mentioned that the Eurocopter deal was not awarded with proper procurement procedures.

A local representative for the Kenlowna Flightcraft Ltd has mentioned that his supplier should have been chosen instead by giving reasons that their pricing was the lowest and their Kazan MI-172 KF helicopters (Russian made) are widely used in the world. Why choose Eurocopter instead?

A bit hard to compare an apple with a pear. How to evaluate if the functions are totally different? Why not compare apple with apple? Now you try to compare:-

* Brazil bought the same helicopters from Eurocopter at a price consideration of US$1.2 billion for fifty 'Super' Cougar units (rumoured to be the EC 725 range) of which the first unit will be delivered in 2010. (average price of one unit - RM84 million)

* Malaysia will be purchasing twelve EC 725 Cougar units at a price consideration of Euro 463.44 million. (average price of one unit - RM193 million)

One of the arguments for the lower pricing that the Brazilians are getting is due to bulk purchase. I think it works for any kind of purchase. If you buy a lot, your bargaining power is much stronger but this is a vast 57% discount on the Malaysian pricing.

Then people said that detailed specifications haven't been made. Maybe the Brazilians are just buying the helicopter shell with basic specifications. Just like when you purchase a new car that has a wide range of pricing for the same model. The thing is that the Brazilians are using it for the same purpose i.e. for search and rescue and some units are to patrol the large international borders that Brazil has.

Another positive argument for Brazil's low pricing is that Eurocopter will construct those fifty units at their subsidiary company's, Helibras, premise based in Minais Gerais, Brazil. Local production will be much lower compared to constructing one at overseas venue before flying the completed model over. Yet, Eurocopter will be investing US$300 million to US$400 million in this new manufacturing plant. Maybe Malaysia will have two of such plants looking at the cost incurred.

This local production is being supported by transfer of technology and help Brazil expand the export capacity of its aviation industry by aiding the assembly of helicopter components such as engines and electrical systems. This helicopter deal comes with the potential purchase of fighter jets under Brazil's Project F-X2 Fighters and nuclear-powered submarine from French companies.

Does Malaysia's deal comes with such transfer of technology? Malaysian people being sent to France for technical trainings? No? What's Malaysia future maintenance cost?

Now, we are comparing apple with apple!

Anyway, the Public Accounts Committee (PAC), will be conducting an investigation on the anomalies reported and hopefully their investigation is not biased and will tell nothing else but the whole truth.

I think Malaysia's helicopter purchase is quite small compared to India's proposed purchase of 317 helicopters at a cost of US$2.5 billion. Eurocopter's ear has jumped at that potential sale too.

The Ministry of Defence will be very busy soon as they are expecting tenders come in for the supply of armored personnel carriers soon. One of the international supplier, Rosoboronexport, has expressed its interest.
Tags: Malaysia, Ministry of Defence, Sikorsky Helicopter, S61-A4 Sea Kings, Nuri Helicopter, Eurocopter, Eurocopter EC 725 Cougar, European Aeronautic, Defence and Space, EADS, Kenlowna Flightcraft Limited, Kazan MI-172 KF, Helibras, F-X2 Fighters, Nuclear-Powered Submarine, France, Public Accounts Committee, PAC, Armored Personnel Carrier, Rosoboronexport, CSAR



Blogger Kev said...

goodness me, the Eurocopter certain looks ready for battle. i wonder whether we're buying it for defense or for search and rescue... or both! Even if it's both, do we need to buy so many ah? It's like we're getting ready to go to war.

Money should've been spent elsewhere for the people's benefit.

20 October, 2008 16:09  
Blogger eiling lim said...

Well, the govt does not need to give its citizen a reason to spend money. Everyone knows that behind every purchase, there's a deal. The question is - how much is the deal and who benefits?!!

21 October, 2008 08:58  
Blogger Johnny Ong said...

kevin - considered little as brazil's buying 50

eiling - i wonder also

22 October, 2008 13:53  
Blogger foongpc said...

How much is the deal and who benefit from it? That's the question we want answers to. I guess we will never know, will we?

23 October, 2008 11:04  
Blogger Johnny Ong said...

foong - if no one exposed such differences, the government would have kept quiet on such purchase, be it right or wrong

23 October, 2008 23:33  
Blogger ping said...

Wow... You really know a lot... This is the first articled which explain in such a detail why this purchase is a brainless deal.

01 November, 2008 00:41  
Blogger Johnny Ong said...

better world - i read and do research (when time permits) before i blog

14 November, 2008 04:11  

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